Letters | In boosting revenue, Hong Kong should not be borrowing to get by

Readers discuss concerns about government bond issuance, childcare risks, and why the city needs stricter speed limits

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Children look at the Hong Kong Island skyline from Tsim Sha Tsui in 2019. While the Hong Kong government’s green bonds are aimed at promoting the development of related markets, there are concerns about the need for continuous issuance over a decade. Photo: Bloomberg

Published: 11:30am, 1 Feb 2024

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The Hong Kong government’s fiscal deficit has exceeded the financial secretary’s full-year estimate of HK$100 billion. Furthermore, the actual deficit for the financial year is expected to exceed HK$200 billion, including about HK$65 billion issued in green bonds.

The Hong Kong government started to issue green bonds in 2019, and plans to issue more over the decade. The appendix to the most recent budget contains a five-year fiscal forecast that notes the revenue from the green bonds, but does not seem to calculate the interest costs involved.

The green bonds denominated in foreign currencies have maturities of five, 10 and 30 years. The redemption and interest payment dates for some of these bonds extend beyond the five-year forecast range, significantly reducing transparency in, and thus scrutiny of, government spending. We urge the government to extend the forecast period and provide clear disclosure of the bond costs in the coming budget.

While the issuance of green bonds is aimed at promoting the development of related markets, there are concerns about the need for continuous issuance over a decade and it also raises questions about whether Hong Kong has entered a phase of borrowing to get by.

It is also important to point out that in recent years, land sale revenue has been calculated differently, with projections using a 15-year average instead of a 10-year average.